Gold hits one-month peak as China hits back over U.S. tariffs

(Reuters) - Gold prices rose 1% to a more than one-month high on Monday as investors sought a safe haven from market turmoil triggered by China announcing that it will increase tariffs on U.S. imports, retaliating over levies imposed by the Trump administration.

Spot gold was 0.9% higher at $1,297.10 per ounce at 10:29 a.m. EDT (1429 GMT), after hitting $1,299.49, its highest since April 11.

U.S. gold futures climbed 0.8% to $1,297.80 an ounce.

“We are seeing safe-heaven buying right now with the break down in trade talks and China talking about retaliating,” said Phillip Streible, senior commodities strategist at RJO Futures.

“Geo-political risks are rising, trade tensions escalating, the dollar is down and equities are really under pressure - all these factors are boosting gold prices right now.”

China said on Monday it would hike tariffs on a range of U.S. goods, striking back in its trade war with Washington shortly after U.S. President Donald Trump warned it not to retaliate.

The move weighed on equity markets worldwide and pushed the U.S. longer-dated Treasury yields to six-week lows. [MKTS/GLOB] [US/]

The dollar index also fell 0.3%, making gold cheaper for holders of other currencies. [USD/]

The metal had earlier hit a session low of $1,281.35 an ounce as the mounting trade concerns weighed on the yuan, denting demand in the world’s biggest buyer of the metal, China. The Chinese currency dropped to its lowest levels against the U.S. dollar since December. [FRX/]

“Gold had lagged early but the Chinese tariff announcement put more pressure on equity futures,” said Tai Wong, head of base and precious metals derivatives trading at BMO.

“So this is speculative buying based on lower stocks and lower yields with a technical break on the upside adding momentum.”

On the investment side, speculators raised their net-long position in gold in the week ended May 7.